Mkt Segmentation Guide #10

Markets are segmented; if you don’t figure out what the segments are, your competitor will.

There are several examples in business history where a pioneering marketer in a product category tries to appeal to the entire market with their offering.  Eventually, a competitor recognizes that not everyone wants/needs the same thing.  The competitor develops an offering that successfully attracts a given segment of the market.  Another competitor develops an offering that appeals to another segment of the market.  One by one, the mass marketer find the various segments away from them.

One example is Henry Ford with his Model T.  General Motors and other competitors took Henry’s customers segment by segment with the creation of brands that appealed to separate segments.  Chevrolet was acquired by General Motors in 1917 and was positioned by Alfred Sloan to sell a lineup of mainstream vehicles to directly compete against the Model T.   General Motors first produced the Oakland and later the Pontiac to appeal to those consumers who sought something a little better than the Model T.  Oldsmobile and its companion brand, Viking, appealed the the next more affluent segment of the market.  Buick and Marquette represented the next step in product price points.  Finally, LaSalle and Cadillac appealed to the most affluent consumers.  Henry may have put American on wheels, but many of those Americans ended up driving General Motors' and other competitors' cars.

Another example is Holiday Inn which pioneered the modern hospitality category.  Holiday Inn had a target market in mind when it was created, the family traveler.  The original Holiday Inn facility was designed to appeal to families traveling by automobile.  The garden style layout of the facility allowed the family to park near their room eliminating the need for assistance in transporting their belongings from their car to their hotel room.  However, to attract business people, they began to also locate motels in heavily populated areas where the garden style layout which required a large lot size was not economically feasible.  Thus, they changed their layout to a high rise building.  Competitors learned that the sales person wants/needs hotel features which differ from those of the family.  Middle managers have different hotel wants/needs than either sales people or family travelers.  These competitors took Holiday Inn’s market away from them segment by segment.